Looking to domesticate a judgment based on an out-of-state arbitration award in New York? The process will differ depending on whether the debtor appeared during the confirmation process. New York differentiates judgments obtained by default from those obtained on the merits.
If your judgment debtor participated in the underlying arbitration but failed to appear or oppose your application to confirm the arbitration award—so that the judgment was rendered by default—you will need to sue in New York to domesticate the judgment. This is because New York considers the out-of-state judgment to be a default judgment.
When suing to domesticate a judgment in New York, we ask the New York court to give full faith and credit to the out-of-state judgment. The New York court does not inquire into the underlying merits of the case. The court’s job is simply to confirm that the out-of-state court had jurisdiction over the defendant and that the debtor was afforded due process.
A Real World Example From Our Client With an Out-of-State Arbitration Award
We recently handled a case involving a default judgment based on an arbitration award. We were asked to domesticate an out-of-state Texas judgment based on an arbitration award. All parties actively participated in the arbitration, but the losing party failed to object to the confirmation of the arbitration award. The Texas court confirmed the award and entered the judgment.
In domesticating the Texas judgment in New York, the defendant-debtor raised issues that the New York court found would have been appropriate objections to confirming the arbitration award in Texas. The debtor should have objected to the confirmation of the award (i.e., that the award was improper or that the arbitrator exceeded their authority) during the confirmation of the award in Texas.
The New York court held that the Texas state court had jurisdiction over the defendant and that the defendant had an opportunity to object to the award but failed to do so. The New York court found evidence of due process, meaning the defendant couldn’t contest the domestication of the judgment in New York. The defenses the debtor had should have been raised in opposition to a motion to confirm the arbitration award, which they failed to do.
The Texas judgment was domesticated here in New York! We won the case and our client now has a New York money judgment, valid for 20 years, to lien property in the state of New York.
Looking to domesticate an out-of-state judgment in New York. Contact Frank, Frank, Goldstein and Nager by email or call +1 (212) 686-0100. We have the experience that pays.
